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Texas Business Organizations Code - Section 7.001. Limitation Of Liability Of Governing Person

Legal Research Home > Texas Lawyer > Business Organizations Code > Texas Business Organizations Code - Section 7.001. Limitation Of Liability Of Governing Person

§ 7.001. LIMITATION OF LIABILITY OF GOVERNING 
PERSON.  (a) Subsections (b) and (c) apply to:
		(1)  a domestic entity other than a partnership or 
limited liability company;
		(2)  another organization incorporated or organized 
under another law of this state;  and
		(3)  to the extent permitted by federal law, a 
federally chartered bank, savings and loan association, or credit 
union.
	(b)  The certificate of formation or similar instrument of an 
organization to which this section applies may provide that a 
governing person of the organization is not liable, or is liable 
only to the extent provided by the certificate of formation or 
similar instrument, to the organization or its owners or members 
for monetary damages for an act or omission by the person in the 
person's capacity as a governing person.
	(c)  Subsection (b) does not authorize the elimination or 
limitation of the liability of a governing person to the extent the 
person is found liable under applicable law for:
		(1)  a breach of the person's duty of loyalty, if any, 
to the organization or its owners or members;
		(2)  an act or omission not in good faith that:                               
			(A)  constitutes a breach of duty of the person to 
the organization;  or   
			(B)  involves intentional misconduct or a knowing 
violation of law;        
		(3)  a transaction from which the person received an 
improper benefit, regardless of whether the benefit resulted from 
an action taken within the scope of the person's duties;  or
		(4)  an act or omission for which the liability of a 
governing person is expressly provided by an applicable statute.
	(d)  The liability of a governing person may be limited or 
restricted:       
		(1)  in a general partnership to the extent permitted 
under Chapter 152;    
		(2)  in a limited partnership to the extent permitted 
under Chapter 153 and, to the extent applicable to limited 
partnerships, Chapter 152;  and
		(3)  in a limited liability company to the extent 
permitted under Section 101.401.

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.                     

Last modified: August 11, 2007